Explained | How is the energy crisis in Europe shaping up? 

Why is the Netherlands government caught in a dilemma with regard to the shuttering of a large gas field in the region of Groningen, which has been plagued by earthquakes? Why should all this concern India?

October 21, 2022 10:30 am | Updated 08:30 pm IST

A sign reading “Nord Stream 2 Committed. Reliable. Safe.” hangs above a painted map of the Nord Stream 2 pipeline from Russia to Germany at the natural gas receiving station in the Lubmin industrial estate in Germany, 2021.

A sign reading “Nord Stream 2 Committed. Reliable. Safe.” hangs above a painted map of the Nord Stream 2 pipeline from Russia to Germany at the natural gas receiving station in the Lubmin industrial estate in Germany, 2021. | Photo Credit: AP

The story so far: As winter approaches, Europe faces an energy problem. The numerous leaks — apparently caused by explosions — to the Nord Stream 1, which is an energy pipeline connecting Russia to Germany, has driven supplies to a halt. Amid anxieties about building up energy reserves, the gas field in Groningen in the Netherlands has once again come under the spotlight.

Why is this gas field relevant?

The region of Groningen in the Netherlands has a gas field that began operations in 1963. During the 1980s, the area saw numerous earthquakes — minor enough to avoid large damage but big enough for local buildings to develop cracks. Following these quakes, the Dutch government had earlier said that it would shutter the field in response to local protests. The closure date was also advanced to 2022 from 2030.

However, due to recent geopolitical tensions, the Dutch government wants to keep options open. In a statement, the Dutch government had in June said that “the Cabinet would like to be in a position to close down the Groningen gas field in 2023, as this is the only way to restore safety in Groningen and to reassure residents in the long run. However, the uncertain geopolitical developments have prompted the mining minister to refrain from permanently closing down any wells this year.” A Bloomberg report earlier this month said that if allowed, the additional supply from the field could go up to a level that would make up for what Germany imported last year from Russia. It said that the field still had potential for about 450 billion cubic metres (bcm) of gas to be extracted.

Can oil or gas exploration cause earthquakes?

The Hindu spoke to professors specialising in both geophysics and geology at IIT-ISM (Indian School of Mines). Prof. Rajeev Upadhyay, Prof. Saurabh Datta Gupta, and Prof. Mohit Agarwal agree that man-made or induced earthquakes can be pretty damaging. Examples of human activity that could lead to ‘induced seismicity’ are damming of rivers to create reservoirs, oil or gas extraction, and mining.

To enhance energy extraction, waste water, sand and chemicals are injected into the earth at high pressure to create fractures in the rocks. This process, called “hydraulic fracturing”, helps improve the interconnectivity of the pores in order to enhance oil and gas extraction. In some cases, fluid is injected into pores connected to the fault which may substantially increase the pore pressure within the fault to counteract the effective frictional forces. This may trigger earthquakes. Also, fluid injection (water flooding) in a hydrocarbon reservoir (rocks that hold hydrocarbons which are oil and gas) is a common operation for the purpose of enhanced oil recovery. Water flooding through injection wells cause pore pressure in hydrocarbon reservoirs to increase, leading to decrease of effective normal stresses in reservoir rocks. Sometimes this decrease of effective stresses causes existing natural fractures to shift towards the window of critically stressed fractures leading to induced seismicity. A small fraction of these injection wells has induced earthquakes thus raising concerns.

Fluid extraction from hydrocarbon reservoirs causes an increase in net effective stresses, which, when supported by the geomechanics of the rock, may lead to development of new faults and fractures. In the case of Groningen, the ground subsiding has been caused by extraction alone over several years. Such extraction causes rocks to contract — as the pores get to hold less and less hydrocarbons over time. 

The professors point to a disastrous earthquake in Koynanagar, Maharashtra, of magnitude 6.5 which occurred in Dec. 1967 which claimed at least 177 lives and injured more than 2,200. General consensus among seismologists was that it was due to reservoir-induced seismicity where the weight of the water column likely substantially altered the stress on an underlying fault / fracture resulting in an earthquake. 

Don’t major gas suppliers in the U.S. or Russia have such problems?

There are several places in the U.S. where hydraulic fracturing has induced seismicity, the professors point out. The largest earthquake known to be induced by wastewater disposal was a M5.8 earthquake that occurred near Pawnee, Oklahoma (USA) in 2016. As per the United States Geological Survey, four earthquakes of magnitude 5+ have occurred in Oklahoma, three of which occurred in 2016. In 2011, a magnitude 5.3 earthquake was induced by fluid injection in the Raton Basin, Colorado.

Earthquakes caused by fluid extraction need not happen at every place that sees extraction. The geomechanical properties of the rock in question determine outcomes. The reaction of rocks to stresses can be different.

Should India be concerned about gas in the Netherlands?

India’s domestic gas price is determined from the average of four global indices viz U.S.’s Henry Hub, the U.K.’s National Balancing point, Canada’s Alberta and Russian gas. Compared with pre-pandemic times, the average domestic price of gas has more than doubled from $5.08/MMBTU to $11.62 and CARE Edge Director of Ratings, Sudhir Kumar, estimates that this is bound to rise again when the six-monthly reset takes place for April-September 2023. India consumed about 63.9 bcm in FY22, about 3.1 bcm more than in the previous year. Imports alone accounted for close to 50% of consumption, at about 30 bcm. Global production is estimated to decline from 4,109 bcm in calendar 2021 to 4,089 bcm in 2022. The situation would become challenging for the government unless the formula for determining domestic gas price is reviewed, he says. Till then, the government has to bear the higher subsidy burden on fertilizer — in the manufacture of which natural gas is used — as well as for the LPG sector.

If supply from Groningen increases, will prices of gas decline?

Usha Ramachandra, Adjunct Professor, National Institute of Advanced Studies (NIAS), Bangalore says: “With winter approaching, demand for heating would be enormous across Europe so I don’t see prices coming down in the short term. Currently, with gas supplies from Russia impacted, they are looking to West Asia and Northern Africa. New supplies within Europe will first serve Europe.”

Her view is that Europe has been making the shift to clean energy so they would not like to be perceived as increasing “coal” sources, so currently the fuel of the day is natural gas for heating, for support to renewable energy integration, to hydrogen initiatives and clean transportation. “The only — fuel price that could ease, in my understanding, is that of coal... In any case, the winter has to pass and it depends on how severe the winter will be. Britain has already warned of three-hour load shedding daily, unheard of since the 1970s, if they could mop up more gas, they would.”

However, Mr. Kumar is of the opinion that points to the fact that the current price increase is largely linked to supply constraints and “hence any increase in supply would certainly correct the prices.”

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